Evercore ISI maintains Pepsico stock rating ahead of Q2 earnings

Investing.com - Evercore ISI has maintained its "In Line" rating and $140.00 price target on Pepsico (NASDAQ:PEP) ahead of the company’s second-quarter earnings report scheduled for July 17. The beverage giant, currently trading at $134.48 with a market capitalization of $184.38 billion, maintains impressive gross profit margins of 55% and has raised its dividend for 52 consecutive years, according to InvestingPro data.

The beverage and snack giant will release its Q2 2025 results at 6:00 AM EST, with pre-recorded comments and transcript available at 6:30 AM EST, followed by a live Q&A call at 8:15 AM EST.

Evercore projects organic sales growth of 0.9% for the quarter, below the Street consensus of 1.8%, citing continued pressure in North America where the firm models organic sales at -2.0% compared to Street expectations of -0.6%.

The research firm expects earnings per share of $2.02, slightly below the Street estimate of $2.04, noting that weak consumer environment, health trends, potential GLP-1 impact, tariffs, and challenges for Frito-Lay North America continue to weigh on results.

Scanner data showing PBNA (PepsiCo Beverages North America) down 2.2% and PFNA (PepsiCo Foods North America) down 2.3% during Q2 suggests Street numbers may be revised downward ahead of the earnings announcement. The stock currently trades at a P/E ratio of 19.67, which InvestingPro analysts note is relatively high compared to its near-term earnings growth potential.

In other recent news, PepsiCo has completed its $1.95 billion acquisition of the prebiotic soda brand poppi, aligning with the company’s strategy to expand its health-focused beverage offerings. This acquisition is a part of PepsiCo’s broader portfolio diversification, which includes other brands like Siete and Sabra. Additionally, PepsiCo announced a 5% increase in its quarterly dividend to $1.4225 per share, marking the 53rd consecutive annual increase. The company reported nearly $92 billion in net revenue in 2024, showcasing its strong financial performance.

However, challenges remain, particularly in PepsiCo’s Frito-Lay segment, as noted by Evercore ISI, which recently reduced the company’s stock price target from $155 to $140, citing weaknesses in financial guidance and consumer pressures. Similarly, TD Cowen maintained a Hold rating on PepsiCo, highlighting a decline in Frito-Lay’s single-serve sales due to pricing strategies.

In other developments, Eastman Chemical (NYSE:EMN) faced a setback with the loss of a $375 million Department of Energy grant intended for its Longview, Texas project, but Morgan Stanley (NYSE:MS) maintained an Overweight rating with a $115 price target. Despite the grant loss, Eastman plans to continue the project, potentially using its Kingsport facility to fulfill contracts, including one with PepsiCo for recycled PET.

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